Database to contain taxable financial transactions and history of any tax-paying individual.
The government is working on a permanent account number (PAN)-based online repository to enable assessing officers to access all tax-related information and taxable financial transactions of taxpayers, Anita Kapur, chairperson of the Central Board of Direct Taxes (CBDT), said on Tuesday.
"It is called the Income Tax Business Application and once ready, it will vastly improve the data mining and business intelligence of the department and the taxman. It will be a robust database, which will include all sorts of financial transaction data collected on a person or entity," Kapur said at a media interaction.
"When the assessing officer opens an assessee's PAN, he/she will get the entire information. We do 360-degree profiling but that is done by the investigation division of large tax evaders. It will be rolled out in phases and we hope to launch it fully next calendar year," she said.
Though the government also wanted to use Aadhaar data for profiling, Kapur said as Aadhaar was voluntary, information on all taxpayers wouldn't be captured in the database.
She said the government was taking these measures to simplify the tax structure. As part of this, the department will try to dispose of all pending cases by June 30 and all cases in six months.
"It is a radical initiative. And, from her statements and those of Finance Minister Arun Jaitley in various fora, it is clear the government is serious about going after tax evaders. This is a step in that direction," said Rakesh Nangia, managing partner, Nangia & Co.
"From the government's side, the level of monitoring on taxpayers and evaders will increase manifold. All indications are that the Centre and the tax department are moving fast on this."
Kapur said the tax department was widening its net and aiming to bring in as many as 2.5 million new assesses under the tax-paying bracket every month.
"I am just trying to say there has to be deterrence against tax evasion. If my officer is not harsh on a tax evader, I think you would agree that he/she is not doing the job properly. There is a law in place and there is no place for compassion in law. Law has to be enforced fairly and evenly," she said.
On levying minimum alternate tax (MAT) on foreign institutional investors (FIIs), Kapur said the A P Shah committee was set up as part of the government's efforts to resolve that issue. Else, the tax department would have to be answerable to agencies such as the Central Bureau of Investigation, the Central Vigilance Commission and the Comptroller and Auditor General.
She denied any "political pressure" in setting up of the panel, which she said would look at the merits of levying MAT. The taxmen, she said, wouldn't resort to coercive methods to recover MAT dues and would wait for either a Supreme Court judgment or the recommendations of the Shah panel on the issue. If the ruling was against the levy of MAT, the department would stop pursuing the cases, she said.
"I cannot anticipate what the A P Shah panel will do. The Shell and Vodafone cases went against us and once we accepted that judgment, we told our officers 'please don't do future assessments and please don't further agitate these in appeals'."
Asked what the government would do if the Shah panel and the Supreme Court gave conflicting views, she said, "We will cross the bridge when we come to it...The commission has fixed a schedule for hearing all stakeholders…let's see how things proceed."
Among the terms of reference for the committee, the three-member panel is mandated to examine the levy of MAT on FIIs for the period before April 1 this year.
While the Union Budget had scrapped MAT on foreign investors, the tax demand for the period before that was to stay. The committee was set up after the government claimed to have raised tax demand of Rs 603 crore, which spooked investors.
Kapur said the CBDT would defend its Rs 20,495-crore (Rs 204.95 billion) tax claim on Cairn India even after the company was merged with its parent, Vedanta Ltd.
Cairn India has challenged a March income tax notice seeking Rs 20,495 crore for failure to pay withholding tax on alleged capital gains by its erstwhile promoter, Cairn Energy Plc.
"This has gone to court. We have a provisional attachment order. We will ensure that we remain secure. Whatever position changes, we will ensure our security. We are certainly keeping watch on it," she said.
Separately, the department had issued a Rs 10,247-crore (Rs 102.47 billion) tax demand on Cairn Energy Plc for Rs 24,500 crore (Rs 245 billion) of alleged capital gains in 2006 while transferring all its Indian assets to a new company, Cairn India, and getting it listed on stock exchanges.
After the notice, it restrained Cairn Energy from selling its residual 9.8 per cent stake in Cairn India.
"The high-level committee to scrutinise all income tax cases arising out of the retrospective tax has received less than 10 applications so far," Kapur told reporters.
She said tax evasion was "spoiling" the culture of compliance in the country. "We try to ensure our tax regime remains non-intrusive....but there are certain people or cases against whom intrusive action is required because not everybody is willingly compliant. We have the powers of search and seizure under the Income Tax Act."
She added it was possible that due to a lax system of enforcement, even compliant taxpayers would "waver" from their duty.
"Demonstrative action" was required against evaders, she said. Soon, the Centre would initiate fresh rounds of negotiations with Mauritius on the double taxation avoidance agreement, she said, adding the Foreign Account Tax Compliance Act agreement with the US would be effective from September.
Database to contain taxable financial transactions and history of any tax-paying individual
It will increase scrutiny on tax evaders
CDBT chief says taxmen will stop pursuing MAT cases if the Shah panel or the apex court rules against these
Says I-T dept will continue pursuing its Rs 20,495-crore tax claim on Cairn India
Adds tax evasion is 'spoiling' the culture of compliance in the country
Says fresh talks with Mauritius on double taxation avoidance agreement soon